“Residual Income (also called Passive Income) is income earned on an ongoing basis for effort done once in the past.”


In a nutshell, there are three types of income streams that you may have coming into your business. One income source is when you do a one-time job, sale or perform a contract, you get paid once and the income stops there.

Another income source comes from a 9 to 5 job, you will continue to get paid as long you work for your employer, often called a linear income. Most workers fall into this category of income source. Neurosurgeons, lawyers or engineers, are only paid as long as they continue working. Stop working and their bank account pause.

** The third type of income is the residual or recurring income where you are paid even after you have stopped working.

Developing Residual Income

Using someone else’s products is the ultimate in leverage. Particularly a product that automatically gets reordered month in month out. THAT is powerful.

Have you ever considered how much time, effort and money goes into developing a product? Most of us firstly, don’t have the money to back us in developing a product nor do we have the knowledge and skills to do so.

However, these days it is so easy to tap into other peoples products. I’d much rather have them have their money tied up in inventory then mine! Then on top of that, have them ship the products or services to YOUR customers every month for you as well.

So if you don’t have to deal with stock, inventory or actually handle the product…this makes it ideal for the homebased business owner. It simply leaves you with marketing or spreading the word. BUT – make no mistake. Marketing is work!! It is just great to be able to received payment for that one time effort for months and years to come!

There are many various residual income programs available online today. This is very exciting for the average person if they are in the right one.


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Here are the top 3 things your residual income program must contain.

1. You must sell a product or service that has an ongoing demand. This is extremely important because without a product that people will continue to need your residual income will fall apart.

You see this happening in many MLM residual income programs. For some reason many MLM’s are built around nutritional supplements and there is much higher drop out rate attached to those.

People tend to stop using the product once they are not making money selling it. Therefore this is a bad product to represent because there is not an ongoing demand.

2. The compensation plan should also include a realistic way to create a residual income. The plan must include a way for you to make adequate money! Many residual income programs do not offer enough cash flow and people tend to get frustrated and quit. If you are selling a product that allows you to make “real” money!

3. The residual income program must give you marketing materials to help you succeed. The average person does not know how to create a website, for example, therefore it is difficult for them to promote their opportunity online. By giving you quality marketing materials they are helping you guarantee your success.


IMPORTANT FACT: Even residual income can diminish and eventually end. People have various reasons to stop using services – the account may have only been for temporary time period. Or perhaps the reason for the account changed.